Contracts are the bedrock of virtually every business arrangement, and in simplest terms, they're an exchange of promises that are legally enforceable. A contract involves the making of an offer, voluntary acceptance of that offer, assurance that the agreement involves an activity that is legal, and spells out the service or product that will be provided for a specified price. Factors like date of delivery, length of the business arrangement, and terms of terminating the deal should also be written into the document.

In most cases, a contract will dissolve naturally after both parties have done what they promised. Sometimes, however, one party will fail to live up to the terms for no valid reason and that's where the law comes in. A written document will protect you from against such breaches, and let us emphasize WRITTEN. An oral arrangement has far less legal standing than a written deal. If one side breaches a contract, the other side has three options: they're no longer bound to continue with their end, they can sue for damages, or they can insist on performance if damages are not adequate. To further explain the last of the three options, let's say your company depends on a particular kind of widget that cannot be purchased through another vendor. Since it's a unique product, the supplier would be compelled to follow through.